Since 2007, Google had been making a “virtuous” claim.
It declared it was carbon neutral and had implemented sustainable business practices.
How was this possible? The scale of Google’s operations, even back then, was massive.
Not only are its office footprints huge, but it also maintains massive data center facilities around the world. Its scale is hard to comprehend.
Google’s Global Data Center Footprint | Source: Google
And almost all of Google’s data centers are fueled entirely by carbon-based energy.
It’s the only way the company can ensure 24/7 operations on a global scale.
So how could Google claim carbon neutrality for so long?
Google, like other companies, did this by waving a wand and purchasing carbon offsets – financial instruments designed to offset carbon emissions.
They are used to “greenwash” corporations’ use of carbon-based energy, allowing them to make marketing claims of being carbon neutral.
But something happened in the last few years.
That something, of course, was the explosion in artificial intelligence (AI) research and development. And with it, the need for drastically larger data centers, computing power, and, of course, electricity.
This July, Alphabet (Google) had to come clean. It announced that its carbon emissions were up 50% since 2019 because of its data center expansion. It also shared that its 2023 carbon emissions were up 13% over 2022.
And in a striking admission, in its latest environmental report, Google announced that “starting in 2023, we’re no longer maintaining operational carbon neutrality.” And it stopped buying carbon offsets.
Capitulation.
The growth of its data centers and artificial intelligence initiatives was simply too great. It became impossible to maintain the charade of carbon neutrality.
Google needed to lean in. Press the reset button.
It chose growth over maintaining its carbon neutrality charade. And it has charted a new path forward – one that provides for even more electricity production, not less.
So it was a pleasant surprise to hear this week that Google announced that it will do something tangible and concrete to achieve its desire for clean energy. It will back the construction of seven small modular reactors (SMR) in the U.S.
Google had entered into a power purchase agreement, committing to buying power from these seven future reactors, which will be built by private nuclear power company Kairos Power.
Kairos Power is a peculiar choice because it is still very early stage and has limited funding to date.
In 2019, it received a $10 million grant from the U.S. Department of Energy and does not appear to have raised any large institutional capital since then.
Kairos’s approach to advanced nuclear fission power is through a pebble bed reactor design. Shown below on the left, the pebble bed reactor is fueled by ceramic “pebbles” that contain Tri-structural ISOtropic (TRISO) fuel. The fuel is made up of uranium, carbon, and oxygen.
Kairos Pebble Bed Reactor | Source: Kairos Power
What makes pebble bed reactors interesting is that the ceramic coating prevents the release of radioactive fission products. The TRISO fuel is more resistant to neutron irradiation and corrosion, as compared to traditional nuclear fuels used in fission reactors.
The other major benefit is that the TRISO particles cannot melt, even in a high-temperature reactor. That means the reactor can’t melt down. Pebble bed reactors are an inherently safe reactor design.
Kairos uses molten fluoride salt as a coolant. This transfers heat well at very high temperatures, is chemically stable, and does a good job of retaining any radioactive byproducts from the fission reaction that might be released by the fuel.
While the terms of the deal between Google and Kairos were not disclosed, my working assumption is that Google will provide advanced payment as part of the deal. Kairos simply will not be able to build its SMRs to support Google without the capital to do so. And the agreement with Google will give Kairos the ability to go out and raise even more capital from institutional investors.
The schedule is for Kairos to “turn on” the seven reactors for Google between 2030 and 2035. In the nuclear power industry, a six-year timeline to the first operational nuclear reactor is pretty fast, which is why I’m assuming that there is a lot of capital involved in the deal.
The deal envisions bringing a total of 500 megawatts of power online for Google, enough to power an entire mid-sized city in the U.S.
If that wasn’t exciting enough, Amazon just announced yesterday a similar agreement. It signed three agreements directly supporting small modular reactor projects.
Amazon is in the process of completely repositioning nuclear power as “clean.”
Nuclear is a safe source of carbon-free energy that can help power our operations and meet the growing demands of our customers while helping us progress toward our Climate Pledge commitment to be net-zero carbon across our operations by 2040.
– Matt Garman, CEO of Amazon Web Services
In Washington state – the home of Amazon’s headquarters – Amazon signed a deal with Energy Northwest, which is a consortium of state public power utilities, to develop four SMRs for Amazon.
Those reactors will generate 320 megawatts of power initially, growing to 960 megawatts, scheduled to come online by the early 2030s.
Related to that deal, is a $500 million investment in X-energy, a more mature private company that had already raised about $385 million before Amazon’s investment.
Interestingly, X-energy’s nuclear fission technology is also a pebble bed reactor that uses TRISO fuel. The main difference is that X-energy uses a high-temperature, gas-cooled reactor as opposed to molten fluoride salt as a coolant.
X-energy Xe-100 Pebble Bed Reactor | Source: X-energy
The $500 million investment from Amazon is designed to provide X-energy with enough manufacturing capacity to complete its SMR design and bring online more than five gigawatts of nuclear power.
The third agreement that Amazon signed was with publicly traded Dominion Energy (D) to explore the development of a new SMR-based nuclear power plant close to Dominion’s North Anna nuclear power station.
The target is to generate at least 300 megawatts of carbon-free energy in northern Virginia.
The announcements from Google and Amazon this week follow Microsoft’s big announcement last month with Constellation Energy (CEG) to turn back on a nuclear reactor on Three Mile Island. We explored that development in The Bleeding Edge – Microsoft’s Power Grab.
An announcement like this would have been unthinkable several years ago.
How times have changed…
Nuclear power is all the rage right now. It’s no longer a whisper behind closed doors. Deals like these are being announced with pride by the tech industry.
In truth, there is no other choice for grid-scale, carbon-free energy.
And this time, the tech companies that need gigawatts of electricity are proactively funding the development of next-generation nuclear power technology.
They aren’t waiting for institutional investors, or the government, to take the risk. They are stepping up to fund it themselves.
Finally, real, tangible, practical progress towards clean energy.
Regards,
Jeff
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
